Economy braced for Katrina's fallout

The United States can expect major economic disruption which
will ripple worldwide after Hurricane Katrina's furious winds and
rain shut down ports and hammered oil production, analysts
say.

With towns flattened, Mississippi ports blocked, coastal refineries
starved of crude and oil production in the Gulf of Mexico virtually
at a standstill, Katrina has had a devastating effect.

Total economic losses from one of the most powerful hurricanes in
US history could go as high as $US35 billion ($NZ50.8 billion),
said Peter Zeihan, senior analyst at Stratfor, a global economic
and political consultancy in Austin, Texas.

"The big question is how much the rivers and ports have been silted
up. It could be fixed in two days, it could be two months," he
said.

"If it's the longer end, we're going right into the grain
harvest. The US is the biggest grain exporter in the world, and
most of those exports go down the Mississippi. So food and feed
prices could soar worldwide," he said.

"And imports of oil and all sorts of other goods will be blocked
going upstream. Domestic prices will jump as a result."

The US Coast Guard ordered all ports shut from Morgan City,
Louisiana to Pensacola, Florida ahead of the storm, which battered
the coast as it roared ashore early Tuesday just east of New
Orleans.

Two of the Louisiana tanker terminals affected - Port Fourchon and
the Louisiana Offshore Oil Port - combined handle more than 20% of
all the crude oil imported into the United States.

Port Fourchon's director, Ted Falgout, said he feared the sprawling
facility's entrance channel had been blocked by tonnes of sediment
dumped by Katrina.

Access highways have also been damaged and nearby ports that might
have taken up the slack are inoperable, he said.

"If we cannot get the facilities open and the vessels moving to
carry the goods and services necessary to turn the oil fields back
on, it could mean a very large impact to this country's energy
supply," Falgout said.

Oil prices have surged to record highs above $US70 ($101.6) a
barrel in the storm's wake.

Global trade in a range of other goods and commodities, including
grain, cotton, soy, steel, fertiliser and ores, will also be
affected.

In the Gulf of Mexico, three oil platforms were reported missing by
their operators and at least nine rigs were said to be adrift after
Katrina barrelled through the pivotal oil-producing region on its
way to the US coast.

The government said it was reviewing an industry request to tap
into its 700-million-barrel Strategic Petroleum Reserve to keep
supplies flowing to hard-hit refineries on the Gulf Coast.

Wachovia bank economists said the hurricane would dent
third-quarter US growth.

"With as much as 10% of the nation's refinery capacity now expected
to be closed for two weeks or more, there will be considerable lost
energy output during the third quarter," they said in a research
note.

Industry experts said insurance losses from Katrina could top
payouts that followed Hurricane Andrew in August 1992, which caused
nearly $US21 billion ($30.5 billion) in damages in today's
money.